Deadbeat Illinois: Expedited pay helps smaller pharmacies

Sunday

Mar 31, 2013 at 10:00 PM

GALESBURG — Pharmacies are not immune to the state's backlog in vendor payments, but the transferring of some patients to a new Medicare plan has helped smaller shops keep their doors open. Read the latest article in GateHouse Media's "Deadbeat Illinois" series.

By Joe WardGateHouse News Service

GALESBURG — Pharmacies are not immune to the state's backlog in vendor payments, but the transferring of some patients to a new Medicare plan has helped smaller shops keep their doors open.

With the creation of Medicare Part D, pharmacists filling some publicly funded prescriptions now get paid through an insurance company, which is easier to work with and more prompt with payments, some pharmacists said.

Of the $9 billion in backlogged payments to various agencies and private businesses, Illinois owes the medical industry over $2 billion, with pharmacists being owed $377 million for prescriptions the state helps fund.

The delayed payments have hurt pharmacies, especially the mom-and-pops, some of which have a substantial amount of their business tied to public healthcare plans. Quite a few of the drug stores have qualified for expedited pay and get refunded faster than other vendors waiting on the state, but that designation has not cured the pharmacies' problems.

Walgreens can withstand a deferred payment for longer than an independent because its business isn't wholly dependent on prescriptions, said Garth Reynolds, executive director of the Illinois Pharmacists Association.

"It especially hurts the locally owned stores who can't spread the debt to other departments or even other locations," he said.

George Burgland, owner of Burgland Drug Store in Galesburg, said his outstanding bills with the state once totaled $150,000. His business saw some relief after 2006, when Medicare Part D went into effect. Part D subsidizes drug prescriptions for Medicare enrollees, but the payment for those prescriptions now comes through a private insurance company. Burgland said three-fourths of Medicare patients he sees are enrolled in Part D, after the state transferred a considerable amount of public aid patients to the program.

"That simplified my life quite a bit," he said. "It took the state out of being the primary and onto someone who has to pay more promptly."

Burgland said the most he is out now is $25,000. What about the irony that insurance agencies are easier to work with than the state?

"Illinois is Illinois," Burgland said. "If that's the way it is, you just have to deal with it."

Because his business is about 95 percent prescription based, Burgland qualified for expedited payments from the state.

About 600 pharmacies in the state qualify for more speedy payments, which stipulates that the business must be paid within 25 days, Reynolds said.

"Twenty-five days helps a lot, but it's still a long time to wait," Reynolds said.

Burgland did about $250,000 worth of business with the state in 2012, according to the Comptroller's Office. He said he has considered lessening the amount of his business dealing in public healthcare plans, but eventually thought otherwise.

"It could be a lot worse," he said. "Part of what I do could be considered a public service, but it would be nice to be paid faster. I'm not complaining too often."

One pharmacy owner in Peoria did scale back his public aid business.

Mike Minesinger of Alwan Pharmacy said about one-fourth of his business is funded through the state, which is less than it was in the past after his business suffered due to the backlog in payments.

"They just don't have the money," Minesinger said of the state. "We diversified our business a couple years ago. Public aid patients account for less of our business than even two years ago."

Minesinger said he has had to wait up to 120 days for a payment. Despite that, he said his business has stayed steady, and even opened a second store in Morton last summer. To keep his business afloat in the lean times, Minesinger kept a cash reserve, but even that wasn't enough at times.

"That reserve was getting a little bit low," he said. "We went out and got a line of credit, but we didn't use it. It was out of extreme caution."

Local legislators have said paying down some of the backlogged bills is a priority in the current legislative session, but finding a solution to the state's unfunded pension system has taken priority. Januari Smith, communications manager for the Department of Healthcare and Family Services, said solving that problem will help ease the unpaid bills problem.